BEIRUT

Regional

Egypt stocks up on housing program

In Egypt, Cairo’s benchmark rose 0.9 percent, with Egyptians and other Arab investors net buyers of stocks, bourse data shows. (REUTERS/Louafi Larbi)

DUBAI: Egypt’s bourse rose to a five-year high Wednesday, ignoring a militant threat against foreign tourists, after the central bank said it would give local commercial banks $1.4 billion to fund mortgages. Most Gulf markets rose though Dubai was hit by profit-taking.

The Sinai-based militant group Ansar Bayt al-Maqdis warned tourists to leave Egypt and threatened to attack any who stayed after Thursday. It is taking aim at an important part of Egypt’s economy and a key earner of foreign exchange.

But many Egyptian investors believe the government can prevent the violence in Sinai from seriously destabilizing the rest of the country, and that billions of dollars of aid from Cairo’s Gulf allies will support its finances.

So the market focused on the central bank’s announcement that it would allocate 10 billion Egyptian pounds ($1.44 billion) for low-cost housing projects.

The money will be deposited at banks for 20 years at a low interest rate, so they can then lend to citizens to buy houses at a yearly interest rate of 7-8 percent.

In response, the main stock index surged 1.6 percent. Shares in Commercial International Bank (CIB), the country’s biggest listed lender, which has been gaining since Feb. 12 when it posted a 29 percent rise in quarterly net profit, added 3.7 percent Wednesday.

“The market is driven by optimism post-CIB results of last week and new proposed funding to local lenders to stimulate mortgage financing in Egypt,” said Islam Batrawy, Cairo-based head of MENA equity sales at NBK Capital.

Batrawy said of the threat to the tourist industry: “The ultimatum is alarming. However, Sinai has been subject to such incidents since January 2011 ... The market is disconnected from such events for now.”

Dubai’s bourse posted a second consecutive loss, shedding 0.6 percent due to profit-taking. However, some stocks rebounded toward the end of the session, indicating that the pullback could be short.

“Selective buying was there on lower support,” said Shiv Prakash, senior technical analyst at NBAD Securities. “We have seen such corrections in the past and afterward we saw new buying and the market reached new highs.”

Among gainers Wednesday was builder Arabtec, which added 0.6 percent after its unit won a $272 million contract for mechanical, electrical and plumbing work at a development run by Abu Dhabi’s Aldar Properties in Kazakhstan.

Qatar’s bourse rose 1.1 percent, largely on the back of Qatar Insurance Co, which last week announced it would buy Antares Holdings, owner of the Antares Syndicate 1274 at Lloyd’s of London. The firm’s stock jumped 26 percent Wednesday.

Bahrain’s index gained 0.8 percent as shares in Arab Banking Corp jumped their daily limit of 10 percent, after it reported Tuesday a 17 percent increase in net profit for 2013 compared with nearly flat earnings a year earlier.

The firm also said Wednesday that it was hiring Ray Ferguson, current chief executive of Standard Chartered Singapore, as chief banking officer.

 
A version of this article appeared in the print edition of The Daily Star on February 20, 2014, on page 6.

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Summary

Egypt's bourse rose to a five-year high Wednesday, ignoring a militant threat against foreign tourists, after the central bank said it would give local commercial banks $1.4 billion to fund mortgages.

Shares in Commercial International Bank (CIB), the country's biggest listed lender, which has been gaining since Feb. 12 when it posted a 29 percent rise in quarterly net profit, added 3.7 percent Wednesday.

Bahrain's index gained 0.8 percent as shares in Arab Banking Corp jumped their daily limit of 10 percent, after it reported Tuesday a 17 percent increase in net profit for 2013 compared with nearly flat earnings a year earlier.


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